Investopedia, a leading personal finance website, recently conducted an analysis revealing that the price tag for achieving the traditional American Dream has surpassed $3 million. The analysis encompasses the average costs associated with ten major aspirations tied to the American Dream, including marriage, homeownership, raising children, education, and retirement, along with additional considerations like pets, cars, and funeral costs.
Defining the American Dream as the belief in achieving success in a society that offers upward mobility for everyone, Investopedia’s analysis sheds light on the financial challenges many Americans face in realizing these aspirations. The cumulative cost to accomplish these goals averages $3,455,305, a figure that encompasses the evolving dynamics of contemporary life.
However, the analysis points out a stark reality – this comprehensive American Dream may be financially out of reach for a significant portion of the population. The average lifetime earnings for all Americans are estimated at around $2.3 million, according to Georgetown University’s Center on Education and the Workforce. Coupled with an average life expectancy of 76.4 years, as reported by the Centers for Disease Control and Prevention, the financial feasibility of achieving the American Dream becomes a concern.
Here is a breakdown of some of the most expensive components contributing to the American Dream:
- Health Insurance: The average family premiums for health insurance, based on the Kaiser Family Foundation’s 2023 Employer Health Benefits Survey, amount to $934,752 over a 39-year period (ages 26-65).
- Homeownership: With the average home value in the U.S. at $346,653 (as of September 2023), purchasing a home with a 30-year fixed loan at 7.2% and a 10% down payment incurs a lifetime cost of $796,998.
- Retirement: The estimated cost of retirement stands at $715,968, equivalent to 80% of the 2022 national median household income accrued annually over 12 years.
- Raising Children: The cost of raising two children to the age of 18 is calculated at $576,896, covering expenses such as food, clothing, and transportation, based on 2015 USDA data adjusted for inflation.*
These figures underline the financial complexities of achieving the American Dream in the contemporary landscape, emphasizing the need for nuanced discussions on economic mobility and the challenges faced by individuals and families.